Today’s guest is Franco Perez.
Franco is on a mission to create affordable housing in Silicon Valley. He discovered that the Bay Area’s mobile home parks offer an abundance of underused land with great growth potential.
Show summary:
In this podcast episode, Franco Perez discusses his mission to create affordable housing in Silicon Valley by renovating and expanding mobile homes in mobile home parks. He explains how his company revolutionizes the construction industry by building homes on an assembly line in a controlled factory, reducing costs and increasing efficiency. Franco addresses the misconception that mobile home parks are low-quality and emphasizes the benefits of owning a mobile home as a way to build net worth. He also discusses the challenges and opportunities in navigating building restrictions and codes, as well as the need for more young people in the construction industry.
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Intro [00:00:00]
Franco Perez's mission to create affordable housing in Silicon Valley [00:01:01]
Converting old mobile homes into larger, luxury homes [00:02:08]
The benefits of factory-built homes [00:11:19]
Changing perception of mobile home parks [00:12:25]
Challenges in building codes and regulations [00:13:34]
The benefits of mobile home ownership [00:21:59]
Challenges in protecting mobile home parks [00:23:11]
Government protections for mobile home residents [00:24:47]
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Connect with Franco:
Linkedin: https://www.linkedin.com/in/francotv/
Web: https://beacons.ai/franco.tv
Connect with Sam:
I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns.
Facebook: https://www.facebook.com/HowtoscaleCRE/
LinkedIn: https://www.linkedin.com/in/samwilsonhowtoscalecre/
Email me → sam@brickeninvestmentgroup.com
SUBSCRIBE and LEAVE A RATING. Listen to How To Scale Commercial Real Estate Investing with Sam Wilson
Apple Podcasts: https://podcasts.apple.com/us/podcast/how-to-scale-commercial-real-estate/id1539979234
Spotify: https://open.spotify.com/show/4m0NWYzSvznEIjRBFtCgEL?si=e10d8e039b99475f
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Want to read the full show notes of the episode? Check it out below:
Franco Perez (00:00:00) - Cars originally were only affordable to the rich and wealthy, and it was only until they started building it on assembly lines that they were able to make it available for everybody. Right. And how did that happen? It's building processes. It's making making the build of these cars more effective. And that's exactly what we're doing now, is we're building these homes on an assembly line in a controlled factory and maximizing the output of the current labor that we have today. And and with that, we're able to buy material at economies of scale. We're able to really make labor way more effective. And in the in the end, we're we're making the cost, the total cost of the construction way lower than you would if it was a single site unit build home or traditionally built home. Welcome to the How to scale commercial real estate show. Whether you are an active or passive investor, we'll teach you how to scale your real estate investing business into something big.
Sam Wilson (00:01:01) - Franco Perez is on a mission to create affordable housing in Silicon Valley.
Sam Wilson (00:01:05) - He discovered that the Bay Area's mobile home parks offer an abundance of underused land with great growth potential. Franco, welcome to the show.
Franco Perez (00:01:14) - Thanks for having me. I'm excited.
Sam Wilson (00:01:16) - Absolutely. The pleasure is mine. I also am excited, frankly. There are three questions I ask every guest who comes on the show in 90s or less. Can you tell me where did you start? Where are you now and how did you get there?
Franco Perez (00:01:28) - Well, first moved here from the Philippines, got into real estate because of necessity, as the only job I could have taken at the time. Didn't go through school from there. Did real estate agents work? And I hated it and really wanted to help people in the middle class and got into finding out that mobile homes do that very well. So I took it upon myself to to start a business and helping people get into mobile homes. And that's where we are now.
Sam Wilson (00:01:58) - Start a business helping people get into mobile homes. So you're placing tenants essentially in mobile homes.
Franco Perez (00:02:05) - We are doing that.
Sam Wilson (00:02:06) - Are helping people buy mobile homes.
Franco Perez (00:02:08) - Yeah. So, I mean, in the beginning it just first started with really helping people transact, so buying and selling mobile homes. And then from there, once they once we started to build up our business, we realized that a lot of these low quality mobile homes are like single wide trailers could have been optimized. So we start now. We're currently turning a lot of 700 square foot mobile homes and turning them into beautiful 1600 square foot, three bedroom, two bath, 12 foot high ceiling like beautiful luxury homes.
Sam Wilson (00:02:41) - Now what? That's wild. So you found and what year really did you start doing this?
Franco Perez (00:02:49) - You know, we only started our business about almost three years now. Okay. So, yeah, Yeah. So it's pretty exciting.
Sam Wilson (00:02:57) - Absolutely. So and again, I'm forgive me if I'm asking you this, the questions that you've already answered, but I'm a slow learner. You started buying and selling just mobile homes. You started placing people in the mobile homes.
Sam Wilson (00:03:11) - Then you figured out there's a way to renovate. And this is what you said blows my mind. Renovate a 700 square foot mobile home and turn it into a 1600 square foot really nice house. What's the strategy? How do you profit in that? What are the I mean, there's so many questions as it pertains to that. And is that and I'm throwing like 80 questions at you initially ask one. But is that the main strategy now or what is what is the overarching strategy?
Franco Perez (00:03:38) - Yeah. So you kind of said it everything pretty much correctly, except we're not actually buying the mobile homes themselves. We kind of as a construction company, helping, you know, people reach us like, Hey, you own this home. It's in a beautiful location. If we convert this to a much bigger home, you can actually spend X amount. And when you sell later down the line, you're going to make X amount plus more, right? So we create a win win solution for them to convert their old home to a new one.
Franco Perez (00:04:08) - And in return, they have a much more they have much more value in that in that mobile home itself. And then they can sell it for more later down the line. So we really act more as a development style company, if that makes sense.
Sam Wilson (00:04:22) - Yeah. Are these mobile homes placed in mobile home or manufactured housing communities?
Franco Perez (00:04:30) - Yes. Yes, they definitely are.
Sam Wilson (00:04:33) - How do you I mean, I don't own any mobile home parks. So how do you handle the kind of sizing restrictions? I mean, every mobile home park I've seen is they're packed in pretty tight. How do you how do you find that extra 800ft² to expand? And even how in the world do you expand a mobile home? I mean, I would I would have thought those are pretty fixed.
Franco Perez (00:04:55) - Well. Well, a lot of these homes are built in the 70s and they really weren't optimized for high density housing. So keep in mind, like in my area in San Jose, you know, these are mobile home parks that are located right across the street from Google, Samsung headquarters, Apple headquarters, you know, prime location.
Franco Perez (00:05:13) - And people are paying high dollar amounts just to rent a rental apartment. One bedroom, one bath is typically about 3300 bucks. If they were if someone wanted to purchase a single family home that never owned one. The median price point for a single family, homes $1.6 million. Right. So big contrast in between and came to realize that, hey, these are already in prime locations. They're just built in the 70s. They're old style homes. And, you know, they weren't built to last this long. So what we do is we can we're realizing like you're on they're on a lot themselves. Some parks, they are pretty packed. But there's, you know, in our parks, you'll typically see a single wide with a porch on the side and then we'll end up maximizing and retrofitting their lot so that they can get the maximum amount of value. Of course, we have to analyze each space case by case and see how they can maximize their value. But in most cases, you can turn a single white into a double wide and we're doubling the square footage and raising the value by a lot.
Sam Wilson (00:06:18) - Wow. And you're you're doing this construction work for existing owners.
Franco Perez (00:06:26) - Correct.
Sam Wilson (00:06:27) - Okay. Yes. And are those owners, the people that actually live in the home, or is it and I'm just asking more specifically, like you're there in the in the Bay Area, Are they are they tenants that are living there? Like who is what's the profile of the person. I guess that actually yeah. House.
Franco Perez (00:06:46) - Yeah. So I guess first off, like the big stigma around mobile home parks is that, hey, the, you know, we only get our perception of mobile home parks from the media really like TV or the news or, or Eminem music videos. Right? And our perception of mobile home parks is that they have low quality people, that they have low quality builds. And this is really only for the poorest of the poor. Right. And but the truth of it is, is just like in apartment buildings, like, hey, there's apartment buildings where I don't want my kids ever visiting or that sort of thing.
Franco Perez (00:07:16) - And then there's luxury style apartments that are actually beautiful places to live, great communities, great amenities. And that's the same spectrum that we have with mobile home parks. You have, you know, they aren't just bad quality parks. There's very high quality parks that look like resorts that have spas, that have swimming pools, billiard rooms and that sort of thing and have tons of space as well. Right? So that's the first thing. The next is actually I forgot the main part of your question. But, you know, the the main thing is, first, understanding that mobile home parks might not be what you perceive. And also on the financial side, we have a lot of bad knowledge about or bad information about these two. Hey, mobile homes only depreciate in value. They're built of low quality and that sort of thing. But this is all old news that is still being passed on to current day. Right. And that's what we're doing is like I was at Washington, DC, we built a home on Capitol Hill and we showed how beautiful these homes were being built.
Franco Perez (00:08:18) - And on our YouTube channel, we show the quality of how it's being built. We use two by fours, fiber, cement, exteriors, you know, quartz countertops all the way throughout. And it's really such a beautiful thing. What how we're advancing and revolutionizing mobile homes itself. Right?
Sam Wilson (00:08:34) - Oh, that's cool. I love that. So lots of questions on that front. So we've talked a little bit who who the owners of these are. I mean, California's not known for having a few rules. There's a lot of rules, especially as it pertains to building restrictions and things like that. How how is navigating the building restrictions, building codes, things like that, when you're doing kind of an unchartered waters model, which is, hey, we're going to renovate, expand, build on to a 1970s. Mobile home and turned into something brand. Yeah. How's that process?
Franco Perez (00:09:12) - You brought up? A really good point, and I'm very passionate about, like lobbying and stuff with DC. We were.
Franco Perez (00:09:18) - That's why I was in DC. We were pitching to multiple different states, not just California, but California is of course, kind of the most difficult. Now, one thing to keep in mind is that these mobile homes were building are in mobile home parks. Right. And you don't actually own the land itself. So the that small separation actually allows for us to build a much more efficient and rapid rate because it's not technically real estate. Right? So with that, we have less governance of how we build this. We you know what normally would take me to build a 1500 square foot home on a piece of land would take me 8 to 13 months. Whereas on this, in this mobile home park, I can convert someone's old mobile home to a new one. We just beat our record recently where we completed start to finish in less than two and a half months and it's insane what we're doing. So now we're doing that repeatedly and they love beating our record too.
Sam Wilson (00:10:16) - Well, 75 days start to finish is impressive.
Sam Wilson (00:10:20) - What about what a and I would imagine, you know, the cost component is something you kind of started talking about early on. What's the cost? I mean, are the are the costs lowered in your construction style? I mean, you're doing some pretty cool finishes as well, but there's economies to be found there.
Franco Perez (00:10:41) - Absolutely. You know, one of the big things that's really underrated, we're our country is facing a huge problem when it comes to construction in the future. Right. We're not building enough affordable housing out there. And we have to innovate and change how we're doing, how we're building housing. And it's so important and it's fascinating. If you see on our channel how we build these on assembly lines. And I kind of bring this analogy is that, hey, cars originally were only affordable to the rich and wealthy, and it was only until they started building it on assembly lines that they were able to make it available for everybody. Right. And how did that happen? It's building processes.
Franco Perez (00:11:19) - It's making making the build of these cars more effective. And that's exactly what we're doing now, is we're building these homes on an assembly line in a controlled factory and maximizing the output of the current labor that we have today. And and with that, we're able to buy material at economies of scale. We're able to really make labor way more effective. And in the in the end, we're we're making the cost, the total cost of the construction way lower than you would if it was a single site unit build home or traditionally built home. Right. And that's a huge thing that that we're also working on as well.
Sam Wilson (00:11:58) - That's wild. So you're you're having these manufactured in a facility. Even even even these. Remodels, new construction or reconstructions, if you will. All this is built in a factory and shipped to you.
Franco Perez (00:12:14) - Exactly. Yep. So if you can imagine, just like I know I keep using our area as an example, but this works in many other areas. Like we were just consulting in Austin as well.
Franco Perez (00:12:25) - The labor in these high density areas are very expensive. Now if we can transport the cost of that labor to another outside area where it's less expensive, hey, we're able to create great jobs for an area that doesn't have a lot of jobs, and then we're able to transport these units to to a site that really needs affordable housing. And this is a model that's really been growing and probably the most. Talked about thing in the construction industry and we speak a lot about it. It's very similar to like modular construction. They're starting to do these in apartment and multifamily as well. But we really have to change the way we see building homes. And this is this is a movement that's going to be happening.
Sam Wilson (00:13:09) - Oh, I absolutely couldn't agree more. I mean, it's it's we're seeing it not just on the mobile home park side of things, but the eye getting getting. Buildings like this. Through codes, through building permit phases and allowing municipalities and to accept these types of buildings. I mean, once once this becomes mainstream, it's going to be like, okay, wait, we can reduce the cost.
Sam Wilson (00:13:34) - Like you were saying, I like the analogy of the car assembly line. You know, the Model T came out, I think it was the one that really changed. It was like everybody can now have a car like this is wild, but you know, get it. Getting this stuff pushed through is obviously it's a it's a labor of love, if you will. What are some things that you or some headwinds you're running into on the legal and or building codes, construction side of things that are preventing some of this to go really more mainstream.
Franco Perez (00:14:04) - Well, you know, I really work on this at a at a big level to try to ease as much as we can a few of our issues is. Originally there wasn't a lot of loan options for financing for people that want to own something like this. And through the years it's gotten better and better. Now we have 10% down programs, 25 years, and now we're trying to just get more government backing to help us create this financing as a solution.
Franco Perez (00:14:33) - The second is for it's really advocacy or really letting people know that the. The second restriction is really the perception of mobile home parks and mobile homes itself, right? That's why we push how quality built these are on our YouTube channel. That's why we push how this is helping the teacher that wasn't able to stay in the Bay Area, be able to stay there and have a comfortable financial situation. You know, we loved sharing these stories because the general public misunderstands this. And sometimes in outside areas they try to close this down or feel that it's creating a bad a bad thing in their area. And that's really something that we try to push for and try to protect the preservation of these mobile home parks, right?
Sam Wilson (00:15:22) - No, absolutely. Absolutely. Yeah, They're not they're not generally building more of them in most, uh, most governments and local governments are opposed to them. So it's yeah, you're fighting an uphill battle, but I really like that. Do you see what you're doing is expanding ever beyond the mobile home park industry, or is there just so much opportunity there that that's not even on the on the radar yet?
Franco Perez (00:15:47) - There's there's a ton of opportunity all throughout affordable housing, if you ask me.
Franco Perez (00:15:51) - I think the problem around affordable housing is is so underrated. We don't realize how bad of an issue where it's going to be later down the line. One thing I'll put out there is like all most of our construction labor are 45 and older and they're retiring. And they, they, they they don't want to work anymore. But we don't have enough young generation people that want to get into the labor industry and how are we going to build homes, You know, if we don't innovate now, there's we're going to hit this huge problem and it's something we should see now in and adjust and innovate and build better, Right? And a lot of these regulations and restrictions are causing builders to have difficulty to building homes. And we need to lower the restriction so we can make it easier to build these homes as well.
Sam Wilson (00:16:40) - No, there's.
Franco Perez (00:16:41) - There's a ton of yeah, I'm all for anybody that's helping create housing in an innovative way. And there's so many opportunities out there.
Sam Wilson (00:16:51) - There really are, man. And I'm not going to be on the forefront of that, you know, got my hands in other things.
Sam Wilson (00:16:56) - But I think it's a fascinating thing to watch, certainly, because it's like I mean, I think about this all the time. I live here, even in Memphis, Tennessee. And I'll be honest, like even in the existing housing stock, it's like, my gosh, like stuff is it I mean, especially here in the South. I mean, you know, it's just the the natural environment alone will just wear something out in short order. So not to mention being lived in by humans and it's like, my gosh, our housing stock is aging, it's getting old, like stuff's falling apart, Like and there's it's getting to the point where the replacement housing stock and even even the replacement housing stock that's coming online isn't that great quality. You know, it's going to last nearly as long as this is. So how how are we going to, like you said, continue to provide housing stuff that's well built stuff that will at least stand the test of time. I mean, my I used to think a hundred year old house was old and now I'm like looking around.
Sam Wilson (00:17:50) - I'm like, dang. Like, we're really close to living in 100 year old house. That's this is. This is wild. So yeah, it's just kind of fun to see that how Let's go back to your kind of origin story here a little bit. How did you find the first person and implement the first kind of mobile home park remodel? Like what was what was that process where it suddenly turned you on and said, hey, wait, we're on to something here.
Franco Perez (00:18:16) - Well, I think the first thing I want to mention is that I grew up personally with a single mom and remember the pain points of rent. And I think that's a really big part of why I'm so passionate about this is because I felt that pain. And for me, working as a real estate agent, it just wasn't rewarding. Telling people, you know, helping the richest people I can help find the most expensive homes that I could and turning away the people that were in my shoes like, Hey, I'm sorry, you can't afford it yet.
Franco Perez (00:18:44) - You don't have a down payment yet. Save up some more, make some more, and then we can work together later. Right. And I hated that so much. And and I really wanted to explore out there to find, like, how can we help create a stepping stone for people that can't yet afford real estate and but want to get out of that rat race of renting and looked into government entities, tried that for a little bit. Realize a lot of these rent lowered rent situations aren't really helping families as much as we think they are. It's really the ownership. The wealthy are able to benefit from homeownership like tax benefits, appreciation, building equity, leveraging a loan. And these are things that should also be accessible to everybody. And I came to realize I actually I accidentally stumbled upon on Google Maps, mobile home parks. I was like, Whoa, there's a ton of mobile home parks I never even knew about. And they're everywhere. And and I met the people. I realized that, wow, you know, these people are able to live here and be able to feel financially secure.
Franco Perez (00:19:50) - And and and the financial model of it really is is a beautiful thing. And it's something that more people should realize. But that's kind of how I found out about it. Then it came into how do we help improve it? How do we help build better quality homes in these parks that are already existing in high density, high cost areas? That's how it started.
Sam Wilson (00:20:13) - Do you have a background in the trades?
Franco Perez (00:20:17) - You know, I have no formal education, didn't really go through college or anything like that. But, you know, I think one thing I always look back on is being coming from the Philippines is really being resourceful with what you have. I think people have to realize education and anything we want to learn is out there on the Internet. You know, all the information is there. It's just a matter of how we use it. And if we are passionate about wanting to use it right. And because of my passion of wanting to help for me, helping one single family get out of a rental rat race is so rewarding.
Franco Perez (00:20:51) - And if I can if I know I could do that at scale, man, you know, I'll study this all day and and learn it myself, right? So I seeked upon online I seek developers and learn from them for, you know, worked for them for free and that sort of thing. And that's kind of how I got my education. Right.
Sam Wilson (00:21:10) - Got it. No, I love it. That's great. Wasn't suggesting that necessarily had to have a background in the trades. I just think, you know, I'm even more inspired by what you've done because, you know, I would think that, hey, we're going to walk in. I see that. We're going to turn that into something cool. We're going to build a new a new, completely remodeled, brand new mobile home with twice the square footage and awesome finishes that you would have had a background in the trades and or and building construction. But even that you didn't even have that really necessarily going into it. And self-educated I think is even more inspiring.
Sam Wilson (00:21:41) - So that's really, really cool. One of the things I think about is that it's lots. There are lots rent or lot rent. So if you have a mobile home on it now, you've expanded it from 700 to 1600 square feet. Is it still movable?
Franco Perez (00:21:59) - We we build it to a point to where it's really is permanence could be right and it's not, you know so so it's not like on wheels or anything like that, but it's just enough to be classified as a mobile home. And and the ownership. You talk about rent and I think a lot of people are steered away from mobile homes and owning it itself because you're always going to be paying that rent. But I share to people that this is something that is better than renting and it's a way to upgrade yourself out of renting. Hey, that person that's spending 3300 a month on full rent and after five years have nothing to show for it, they can instead go to a payment like this, which is about 3500 a month to one third of that, let's say, is going towards the low rent, which is like we could we could be negative about it, but realize that two thirds of that is going towards an asset that you own that's helping you build your net worth and helping you progress your family stability.
Franco Perez (00:22:57) - Right. And that's the key thing here is it's a stepping stone to graduate yourself out of that rat race and into your journey of home ownership. And.
Sam Wilson (00:23:07) - I'm sorry. Go ahead.
Franco Perez (00:23:09) - Oh, I was finished.
Sam Wilson (00:23:11) - I'm so sorry. My apologies, Franco. I just. I hear that. I love it. I love the mission. I love the goal there. But how? One of the things that that I follow is mobile home park closures. I follow municipalities that are saying, oh, I mean, it's happening all over the country where it's like, oh, hey, cool, really glad. And people claim that it's the largest privately held mobile home park owners in the country that are kicking everybody out and closing the parks, which is just categorically untrue because if you look at it, there's a lot of municipal I think there was even National Park Service here and it was like, Oh, hey, cool, thanks for you've been here for 100 years, but now we're taking the land back and everybody get out.
Sam Wilson (00:23:53) - You got 30 days. And it was like, Wait, Like residents are furious. How do you as a it's somebody in this position, protect yourselves against that. Like if you're gonna put all this money into this program, all this money into renovating a home and renovating a mobile home park or mobile home rather, how do you make sure that, hey, in two years I'm not going to say, Hey, thanks so much, by the way, get out.
Franco Perez (00:24:16) - Hmm. No. Good. Good question. And I think the there's a lot of bad stories and bad myths. And keep in mind that the news really pushes it's an easy target to talk about mobile homes all the time. Right? So whenever there's a hurricane or that sort of thing, everyone's like always targeting that. But the reality of it, I say take in your own information and your own areas and really realize how these are. And the second part to that is I am very passionate about protecting and preserving these in the government level as well.
Franco Perez (00:24:47) - And we've done that to help protect residents. So there are now and this is different in every area, but in our area, for example, in San Jose or in California, there's it's going to take too long to go into the details. But this park closure happened. Their homes were valued at about $200,000. They had to do a closure to redevelop. And because of the government protections around this, they were the developers were forced to either pay them their value of their home plus 50%. So they were actually getting about 300 K for the value of their home because and then that or they gave them the option to to keep one of the homes that they're building. Right. So they can't just it's kind of like an eminent domain situation. These residents are protected as well. They're not just they have to give them the value of what their home is worth in order to kick them out. Right. So it's not what you think where it's like, hey, they're closed. They lost all of the home value, that sort of thing.
Franco Perez (00:25:46) - It's not that way. There are government entities that protect them. Yeah, And if you think of two, these banks are smart, right? These banks that are funding these residents, they're not going to fund a loan in a park that where they could close and lose all their value, too. Right. So if you think these banks are funding these, of course, they know their risk. They know their legal protections as well, too. So there are a lot of people that are safe in that manner.
Sam Wilson (00:26:14) - Franco This has been enlightening. Thank you for taking the time to share with us what you're doing here for the affordable housing situation we have. You're solving it in a in an incredibly unique way. I don't think I've had anybody come on the show out of 800 and some odd episodes at this point that has even remotely come close to doing what it is that you're doing. So think this is super cool. I appreciate you taking the time to come on today and talk to me and our listeners about it.
Sam Wilson (00:26:42) - If we do want to get in touch with you or learn more about you, what is the best way to do that?
Franco Perez (00:26:47) - All of our links are at Franko TV. Or you could Google us at Franko Mobile Homes and really appreciate what you said. We're so passionate, our team worked so hard on just helping as many people as we can and and appreciate being on your show. Absolutely.
Sam Wilson (00:27:05) - Thank you. Franco. Make sure to include that all there in the show notes. Have a great rest of your day. Hey, thanks for listening to the How to Scale Commercial Real Estate podcast. If you can do me a favor and subscribe and leave us a review on Apple Podcasts, Spotify, Google Podcasts, whatever platform it is you use to listen. If you can do that for us, that would be a fantastic help to the show. It helps us both attract new listeners as well as rank higher on those directories. So appreciate you listening. Thanks so much and hope to catch you on the next episode.
